It Ain’t Easy Being Green

A Laurie & Brennan article featured in the Construction Law Corner Winter 2011 eNewsletter.

by Daniel S. Brennan

Perhaps proving the old adage that no good deed goes unpunished, the U.S. Green Building Council (“USGBC”) has been named as a defendant in a class action lawsuit recently filed in federal court in the Southern District of New York entitled Henry Gifford, et al. v. U.S. Green Building Council, Case No. 10-cv-7747 LBS.   The thrust of the complaint is that the USGBC has misrepresented the scientific basis for the LEED certification system as well as the significance of those persons who have LEED accreditation.   The plaintiffs claim that taxpayers, consumers and construction professionals have been damaged by the predominant market position of the USGBC’s LEED rating system which displaces those professionals who are more qualified and experienced in designing energy efficient buildings, but who are not LEED certified.

The class of plaintiffs bringing the suit includes all persons who paid for LEED certification in reliance on the USGBC’s allegedly deceptive marketing claims; persons who design energy efficient buildings and whose livelihoods are injured by USGBC’s monopolization of the market through fraudulent and intentionally misleading representations regarding LEED, LEED certification and the efficacy of LEED buildings in reducing energy usage; all taxpayers whose state tax dollars are spent on the cost of LEED certification for public buildings; and trade contractors who are injured by the USGBC’s deceptive trade practices because of the loss of time and money to comply with LEED certification requirements.

One of the significant allegations in the lawsuit is that the LEED rating system is not based on objective, scientific criteria.   Specifically, the plaintiffs assert that the LEED system is not based on actual measurements of building performance but instead on computer modeling of anticipated energy usage for a given building.   The plaintiffs also claim that the USGBC commissioned a study by the New Buildings Institute (“NBI”) that resulted in misleading results, at least as the USGBC has characterized those results.

In particular, the class action plaintiffs claim that the USGBC has fraudulently mislead consumers and the building industry by misrepresenting the following information from the NBI study:

• That the new buildings certified under the LEED certification system are on average performing 25-30% better than non-LEED certified buildings in terms of energy use.
• That LEED buildings are 25-30% more energy efficient than non-LEED buildings.

The reason the plaintiffs claim this information is misleading is because:

• The NBI study sample was comprised of just 22% of LEED certified buildings, not all LEED certified buildings.
• A little less than half of the respondents to the study submitted data which NBI deemed actually sufficient to include in the study.
• Less than half of LEED certified buildings responded to the survey and half of those were eliminated from the sample.
• The fact that owners of LEED certified buildings have a vested interest in boosting the value of LEED certification, thus presenting a bias in the results of the study.
• The NBI study compared a set of new buildings to a sample of both new and old buildings.
• The study compared buildings from a database of over 5,000 buildings that include some built as early as 1920 to a LEED sample consisting of buildings built or renovated after 2000, some of which may reflect better energy usage based on widely used building practices and materials and not necessarily attributable to LEED elements.
• The NBI study compared median energy use of LEED buildings to the mean energy use of the buildings from the larger sample.
• There is a difference in calculation between the larger sample on mean average energy and LEED records on median average.

Plaintiffs also take aim at the LEED certification process.   According to the plaintiffs, the USGBC claims that the LEED system provides third-party verification that a building was designed and built using strategies to improve performance across all metrics that matter most, i.e. energy savings.   The plaintiffs claim that this assertion is false because LEED certification does not require verification that the data submitted for certification actually includes any energy use data, that LEED certification is not based on actual building performance and that the USGBC does not have staff or expertise to even evaluate applications for LEED certification.

The legal claims asserted in the class action include monopolization through fraud under the Sherman Antitrust Act, unfair competition under the Lanham Act, deceptive trade practices under a New York state statute, false advertising and a RICO claim.

Based on a review of the court’s docket it appears that the plaintiffs will be filing an amended complaint sometime in February 2011.   Stay tuned.